Definition: Capital is something owned which provides ongoing services. In the national accounts, or to firms, capital is made up of durable investment goods, normally summed in units of money. Broadly: land plus physical structures plus equipment. The idea is used in models and in the national accounts.

lower capital gains taxes on stocks and investments has had no effect on investments in the last 40 years.

One could argue that higher Capital gains taxes encourage continued investments in a stock. Moving the stock would cause one to incur the tax. Leaving in one place reduces ones exposure to the tax.

A lower tax could also be a cause of market volatility as investors see a small tax as less of a burden than losing a money on a stock in the short term.

One can argue anything one wishes, but if lower capital gains taxes have "had no effect on investments in the last 40 years", as you say, then why the explosion of mutual funds and the heavy reliance on equities by pensions? I think that decision makers, individuals and fund managers, put more into equities, in large part, because of the lower tax rate on the investor. This stimulates economic growth. If the capital gains tax is increased, people may go to other investments, which would inhibit expansion by companies (hiring, capital improvements) and negatively impact the economy--how much is open to debate, but in these hard times, do you want to risk such a contraction?

Capital gains taxes is only a part of tax policy. Congress (for the feds) and state and local legislators have put in place tax breaks, as I have outlined, to serve a societal purpose. If any particular tax policy isn't working, it can be changed.

Its apparent that the capital gains lowered rate only helps the weathiest of us. Again, I bet not one of us fits the top 5% and do not have the investments that the top 5% have. We have been hoodwinked, bamboozled,...lied to time and again. Its those of ust that don't drink the grape flavored drink that get it. I understand the wealthy want cleap easy money and the cheapest easiest way to get it is not being taxed on investments. There's a reason this is called unearned income. That's also why it needs to be taxed higher otherwise we end up having a culture hereditary wealth which the founders did not want
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In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

Definition: Capital is something owned which provides ongoing services. In the national accounts, or to firms, capital is made up of durable investment goods, normally summed in units of money. Broadly: land plus physical structures plus equipment. The idea is used in models and in the national accounts.

Gary, what that says is that the tax code ignores economics but seriously effects economics.

That's not what my finance professor and tax law instructors taught me. The tax code has the definition of "capital" correct. But you are right that tax policy, as codified in the tax laws, does, by design, affect the economy.

Huh? Who said economics is a tax code? The tax code uses certain economic principles from economic theories that you may not agree with, but as a science, economics is rather too fuzzy for me. It offers no absolute answers before the fact, and answers that are often highly disputed after the fact.

Not directly related to the way economics is being carried out in the U.S., but at least I know there are several ways in which debt is supposed to be paid back to a loaner of such money.

In any case, such a payback of debt is supposed to be taking time. Such extra time also leads to a higher cost - meaning that in total, more money has to be paid back than was originally loant.

Either the interest rate or the value added tax (VAT) is being included in the amount of money which is supposed to be paid back to the loaner (the one who initially gives you the money for your specific purchase).

In the same way as you may be able to receive money from someone by means of a loan, the same money also constitutes or represents a loss for the one who is loaning you (but not giving you as a gift or perhaps donating) this amount of money.

When using the paperbased system for accounting, I remember there was one account in the proper books for ingoing or inbound VAT and one account for outgoing or outbound VAT. The interest rates for these two different accounts or rates apparently were not the same when it comes to percentage. The last time I came across this, it was around 20 % or less, later going up to 23 or 25 %, or even higher. I really do not know how high this percentage has risen to at the present moment.

This compares with the amount of money you are receiving within a given period of time vs. the amount of money you are spending within the same period. Within the same time period you will have to pay for the necessary expenses to deal with in order to live.

The difference between what you receive (your income) and your expenses leads to either a gain or a possible loss. For some reason (or maybe the same reason) the same principle is being illustrated at a much larger scale by means of inflation (cost increase) vs. deficit (loss of money).

In the end, my best guess is that the difference between these two factors readily are being shown up in the "results". Make a guess about what the name of that difference is.

What he did was quote the definition in the tax code of "capital". The tax code has it right. The code doesn't disagree with the definition I was taught in finance and tax law courses.

I fail to see how this is a tool used in production yet the US tax code calls it capital, "A car used for pleasure or commuting". It is referred to as a capital asset. I agree it is an asset but it is not capital.
This arcane stuff does help determine who is taxed and how much they pay.
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betreger - Taxes are being paid (or even refunded at some times) because there is as mentioned always a difference between income and outcome when it comes to a given amount of money.

Meaning that if you receive 2 dollars from your mother and next pay 1 dollar for a chocolate, you are left with 1 dollar.

Similarly, if you receive 2 dollars from your mother, next get a bill in your mailbox from someone who asks you to pay him or her 4 dollars for 4 chocolates you earlier received but which was meant you should be paying for, that means that you owe that person 2 dollars.

The same goes with taxes. In most cases unfortunately, it ends up in a "tax burden" because you may have ended up having a debt with someone who once gave you money for your specific needs. Meaning with that a loan which generally should be tax deductible and therefore leads to or arises even more cost than the original amount which was offered you.

Guess what the opposite of this is and you are supposed to be paying back money which there is no account for. In such a case, who is getting rich and who is losing money?

Anyone there better able to explain the exact purpose of "taxes"? Is it just paperflow, perhaps?

Or do I rather have to read through all of what is written about it here?

Gary, what that says is that the tax code ignores economics but seriously effects economics.

So does the dictionary. And the 99% of the people who are not economic academics. I did not know that economic academics had purchased the word capital and the right to its definition. I would like to see who owned the rights and therefore could sell it to them. Otherwise you might want to have a talk with some academics in the English department about how definitions of words are placed into the language.

Of course I know when you listen to a lawyer you need a copy of Black's Law dictionary to understand what was meant, but lawyers are special bottom feeding scum. :)

Gary, what that says is that the tax code ignores economics but seriously effects economics.

So does the dictionary. And the 99% of the people who are not economic academics. I did not know that economic academics had purchased the word capital and the right to its definition. I would like to see who owned the rights and therefore could sell it to them. Otherwise you might want to have a talk with some academics in the English department about how definitions of words are placed into the language.

Of course I know when you listen to a lawyer you need a copy of Black's Law dictionary to understand what was meant, but lawyers are special bottom feeding scum. :)

Gary, in this context I think you can blame it on Adam Smith.
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And I ate dinner with a tax lawyer for a fortune 500 company last night. For those of you who wonder that company has 10 offices just for IRS persons who are there year round. Your tax dollars at work.

or the companies finances are so complicated and diverse it takes that many IRS personel to weed through all the filings
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In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope